Following a talk hosted by IEMA CEO Sarah Mukherjee, John Elkington sat down with Transform magazine to discuss the exponential changes he sees facing the world during the next decade
Often described as the 'godfather of sustainability', John Elkington's impact on the environmental movement is hard to overstate. Famous for coining the phrase 'triple bottom line' in 1994, his work has helped spawn numerous reporting frameworks, including the widespread environmental, social and governance (ESG) criteria used by corporates and investors worldwide.
The renowned business author has since retracted the concept, arguing that it fails to deliver the systemic changes needed to tackle society's most pressing challenges. His latest book, Green Swans: The Coming Boom In Regenerative Capitalism, outlines how a new world order is emerging out of a broken economic system that is no longer fit for purpose.
Green swans
Elkington believes the 2020s will be a decade of unprecedented change – but whether it is positive or negative for the environment remains to be seen. “We are on exponential territory, and COVID-19 has accelerated a number of trends that were already apparent,“ he explains. “The old system is breaking down and a new one is struggling to be born, and that means exponential downward trajectories, but it also potentially means exponential upward trajectories.
“If 'black swans' are problems that take us rapidly towards breakdown, then Elkington's 'green swans' are solutions that catapult us towards breakthrough. These could be events or trends that have a profound and long-term positive impact. “Thinking of technology, probably the most dramatic ones are renewable energy and the electric vehicle nexus with batteries and smart grids,“ Elkington says. “We also have artificial intelligence (AI) and big data, which are on such an exponential curve that there will probably be unintended consequences and associated black swan challenges.“
“We are on exponential territory, and COVID-19 has accelerated a number of trends that were already apparent“
Green Swans is a key output of the Tomorrow's Capitalism Inquiry, an initiative by the research and advisory firm Volans, which Elkington co-founded to help businesses prepare for the emergent future. The EU's ‚Ǩ1.85trn green recovery programme could also be a green swan, as could the restoration of the Loess Plateau in China, but Elkington is keen to not overuse the phrase. “We all know that new language can get diluted, so we are trying to resist that,“ he says. “Volans has set up a Green Swans Observatory to identify them, but they need sustained attention for years, decades or generations – as opposed to black swans, such as damage to the ozone layer and ocean plastic waste, which tend to creep up on us.“
System change
More and more companies agree that they have a key role to play in tackling environmental and social issues, but Elkington believes that many are deluding themselves into thinking this can be achieved with incremental steps.
“Capitalism is going to be challenged at a scale at which it has never been before, and the question is whether it has the potential to evolve,“ he says. “People are realising that the Milton Friedman paradigm of the last 60-plus years is wilting quite seriously, and the idea that governments don't have a role in shaping markets is looking increasingly suspect. Capitalism is like the core of a nuclear reactor ¬≠– it generates a huge amount of energy, but is deadly dangerous unless you surround it with lead and water cooling systems. We have removed many of those safeguards, so it's no surprise when everything goes berserk.“
He recalled his triple bottom line framework in 2018 to provoke discussion around the failures of the current economic system. “Despite the progress made by individual companies ¬≠– helped by global reporting initiatives and ranking systems such as the DOW Jones Sustainability Indices and the excellent B Corporation movement – triple bottom line companies still operate in a single bottom line system. Twenty five years of corporate sustainability has not moved the needle farther than 'responsibility' or, simply put, 'doing less harm'.“
Part of the problem with the sustainability profession is that it has traditionally been focused on the responsibility agenda. For Elkington – who has been working in the field for more than 45 years – this mindset is outdated and needs to evolve to become part of a “revolution in capitalism“. “We've been focusing on perils such as oil, chemicals and automotives while the digital revolution has been creating AI, drones and synthetic biology, which we haven't paid enough attention to,“ he explains. “It was Ernest Hemingway who talked about a 'gradually then suddenly' world, and I think we are in a 'gradually then suddenly' world in terms of sustainability – it's been bubbling under for a long time.“
Mass disruption
Elkington was once working in Mexico with a firm called Bimbo – the world's largest bakery company – which had been planning to send its teams to Singularity University in Silicon Valley to learn about exponential thinking and technology. “I asked 'why are you thinking that way when you are turning flour, water and salt into dough and bakery products'? They said: 'Because if we don't do it then our competitors will do it to us, and we want to do it to them'.“
“We have to disrupt the business models of many incumbent industries, and there will be a very high casualty rate“
Learning journeys, study tours and executive coaching exercises are all likely to become more popular as companies attempt to navigate a period of radical change. Elkington says that leaders are looking at firms such as Tesla for inspiration. “I'm amazed Tesla is still with us, given the number of excursions and adventures Elon Musk has been through, but he is one of these extraordinary people like Henry Ford who reinvents not just one sector, but multiple sectors. I'm not saying everyone should be an Elon Musk – God help us – but there are elements of what he's done that are being studied very closely by CEOs, chief technology officers and incumbent industries.“
Going forward, the role of sustainability professionals will be key, and Elkington says companies will have to “step up, or move out of the way“, logic that he and Volans apply when challenging businesses on their role in the emergent future. “If you just look at the Sustainable Development Goals one and two – no poverty and zero hunger by 2030 – those are exponential goals even if you push them out to 2050 or 2060, and cannot be solved incrementally,“ he says. “As much as I hate Facebook's 'move fast and break things', preferring 'move fast and fix things', I do think we have to disrupt the business models of many incumbent industries, and there will be a very high casualty rate.“
War warning
Although we may have entered a decade of radical change that upends business models and ushers in a new era of reformed capitalism, Elkington is keen to reiterate his fear of potential downward trajectories. The world is in the grip of a global pandemic, and the resulting recession is likely to be long term. “This is not going to be a U or V-shaped recovery in short order – this is something that will probably take a decade or 12-15 years to clear,“ he explains. “There is a very depressed feeling to the global economy. Unfortunately, every time you get one of those periods of actual depression you get conflict, and this next decade is almost guaranteed to see ugly exponentials and a major international conflict.“
The warning signs are already there, and tensions between China, India and the US are palpable. “A minister in China told me around 10 years ago that the government there had studied the rise of Prussia, saw what went wrong in WWI and WWII and knew now how to side step that risk,“ Elkington says. “But I don't think they properly understand how conditions change. Part of the problem is populism, and when populist leaders such as Modi in India or Trump in the US are put under pressure, they project outwards, identify an enemy and set themselves up against them. That may be a sidebar, but I don't think it will be a sidebar for long.“
The new order
There is a risk that countries will turn to isolationism in response to future pandemics and other environmental and technological threats. With the EU as fragile as ever, Elkington expects a new generation of leaders to emerge. “When the dust has settled on this exponential decade, we will be led by people we've largely never heard of. That will be true in government, in business and in financial markets.“
He points to Greta Thunberg as someone with the characteristics of a future leader, and argues that there will be an increasing role for activists going forward. “Who would have thought that a 15-year-old would turn the world on its ear and be listened to by heads of state and CEOs at Davos? She's been able to speak truth to people who grew up in a very different world which taught them a particular way of doing things that's genuinely no longer fit for purpose.“
Elkington expects sustainability to be a core pillar of whatever new economic and political system takes shape, and argues that attitudes towards the environment have reached “escape velocity“. “In 100 years we will think of sustainability alongside democracy or liberty as one of these absolutely core overarching concepts – I think it's that strong,“ he explains. “What really marks this period is that the green agenda is accelerating – it went into reverse during every other previous recession I've seen. We've reached escaped velocity, and the challenge for us now is to help the unwinding of the old order, and to support the people building the new economy.“
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